Posts from Wednesday Mar 27 2013

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

Flat, light-volume, US stocks. The S&P 500 closed down 0.1 per cent at 1,562.85, still looking for that record high (Bloomberg).

Cyprus prepared to reopen its banks for the first time since March 16. The six-hour reopening on Thursday will be accompanied by the first capital controls to be introduced in a eurozone country. Cyprus will ban taking more than €3,000 of banknotes on foreign trips, and limit cash withdrawals from deposits to €300 per day among the measures. The controls will last for seven days, but can be renewed by decree depending on the pace of the deposit flight they are designed to stem (Financial Times, Wall Street Journal). Read more

It may seem fanciful that Tidjane Thiam and other directors at Prudential believed that a leak of their planned $35bn takeover of AIA three years ago might come from the FSA. But they did. Here’s paragraph 4.6 from the final notice censuring Mr Thiam and fining the Pru $30m…

4.6. The directors of Prudential, including Mr Thiam, met on 31 January 2010 to be briefed on the proposed transaction by Credit Suisse. There was a consensus between the directors of Prudential at this meeting that:

(1) a leak was the key risk to the transaction;

(2) the FSA was one of a number of parties which might be the cause of a leak; and

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

The public, as well as most of the financial commentariat space, seem mostly to be behind the amended terms and conditions to Cyprus’ Eurogroup bailout, believing them to be fairer for most concerned.

Unlike the original proposal, the new terms do, for example, discriminate between good and bad banks — lessening the burden on those invested in better banks. They spare insured depositors below €100,000. And they require greater participation from other uninsured parties and equity holders in those banks deemed particularly bad. Read more

Looks like the analysts in Citi’s commodities team headed by Seth Kleinman (which includes the inimitable Ed Morse) didn’t get the memo. You know, the one about needing to talk up the carbon complex as much as possible?

After all, how else do you account for the disruptive tone of the following summary points? Read more

A theory was gaining ground on Wednesday that, having utterly failed in any way to deal with Britain’s cartwheeling banks ahead of the crisis, the FSA, Britain’s alleged financial regulator, has now set its sights on wrecking the healthy side of Britain’s financial sector.

The Prudential has been fined £30m, and its strikingly successful chief executive, Tidjane Thiam, has been censured, seemingly for worrying that someone at the FSA might possibly leak news of the Pru’s ultimately bungled takeover bid for AIA three years ago. Read more

The world’s pool of Aaa-rated government debt has fallen 60 per cent since the start of the financial crisis || European regulators to charge banks over derivatives || Cyprus readies capital controls || Fund manager bonuses cap set to be eased || Warren Buffett will become one of Goldman’s largest shareholders || Credit Suisse is to buy Morgan Stanley’s wealth management arm in Europe, the Middle East and Africa || US crackdown on Citi laundering laws || Commodities trading rule call rejected || Improving home prices help drive US economy || Markets wrap || FTAV’s latest Read more

Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

Even if the barn door is closed before the horse bolts, the horse will find another way to escape. That’s essentially the point made by John Dizard over the weekend:

Capital controls turn into trade controls, as the locals attempt to find ways to turn hard assets or non-banking services into foreign exchange. At some price, for example, you can buy a boat in Cyprus with post-haircut, capital-controlled local deposits, sail it to Lebanon, and then sell it for real, usable money. The same with antiques, jewellery, or anything else you can think of. Even capital goods such as fork lifts can be motored off in the middle of the night.

Lisa joined FT Alphaville in September 2011 after a tour of duty through the guts of the financial industry, having worked as an analyst at a bank and for a financial data company. She's now the Head of New Projects for FT.com and fortnightly columnist for the paper.

Secret HQ set up in London to fight cyber crime: “Britain’s security services are to open a new unit in London to work with business to protect UK companies from the growing threat of cyber attacks by China, Russia and Iran. The new initiative – formally called the Cyber Security Information Sharing partnership – will be established at an undisclosed location in London, where around a dozen officers from the Government Communications Headquarters and MI5 will work with business representatives to monitor potential threats.” (Financial Times)

The world’s pool of Aaa-rated government debt has fallen 60 per cent since the start of the financial crisis. The loss of top ratings by the US, UK, and France have helped shrink the stock of debt deemed Aaa by Fitch, Moody’s and Standard & Poor’s from almost $11tn at the start of 2007 to $4tn in 2013 (Financial Times). Read more